What Is A 529 College Savings Plan?

College fees can be a challenge for anyone. With tuition fees rising, as well as other related costs, including books, lab fees, room and board, students and families across the country are looking for ways to reduce this financial burden without having to apply for student loans and online payday loans Illinois.

While grants and scholarships are always a great option, many families are starting to save money to educate their children under the 529 plan. Each state has a plan that benefits families who are saving money to educate their children.

While this previously only applied to colleges, the 2017 Tax Act allows contributions to be used to cover primary and secondary school costs.

Parents aren’t the only ones who can use Plan 529. Grandparents, aunts, uncles, and others can contribute to Plan 529 to help cover education costs. There are two different types of plans to consider: the 529 college savings plan, which allows you to invest and withdraw tax-free to cover education costs, and prepaid plans, which allow you to lock in current state public school tuition rates.

Many states offer state income tax benefits when an individual contributes to a government-sponsored plan. Some states even provide tax breaks for out-of-state plans.

States that offer tax credits to intra-state savings plan depositors

States that offer benefits to any government plan

The minimum contribution varies by state, with the highest minimum contribution being $250.

States that require no minimum contributions

Of all 50 states, Wyoming is the only one without a state plan.